The economic benefits from record levels of immigration to Britain are ‘small and close to zero’, the Lords was told today.

A report by a committee of peers, including two former Chancellors and several former Cabinet ministers, called on ministers to set an ‘explicit target range’ for immigration and make rules to keep within that limit.

Tory former Cabinet Minister Lord Wakeham said the report by the Economic Affairs Committee, which he chaired, rejected the Government’s claim that immigration is needed to prevent labour shortages as ‘fundamentally flawed’.

He told peers the Government had said immigrants brought large economic benefits to the UK in boosting economic growth, filling job vacancies that Britons could not or would not do and paying more tax than British-born workers.

But there was no evidence of such benefits, which had been ‘wildly overstated’ by ministers.

In a debate on the report, Lord Wakeham said: ‘The committee found no evidence of these large economic benefits.

‘What we did find was serious flaws in the Government’s arguments and we concluded that on average the economic benefits of immigration were small and close to zero.’

The report found certain groups in Britain—the low-paid, some ethnic minorities and some young people looking for a foot on the job ladder—may have suffered because of competition from immigrants.

It said ministers should set an ‘explicit target range’ for immigration and set the rules to keep within that limit.

And it raised the prospect of cutting the number of partners and other family members allowed to settle in Britain because a relative is already here.

Peers also warned that the much-trumpeted new points-based immigration system carried a ‘clear danger of inconsistencies and overlap’.

The Government’s decision to use GDP as the main measure of immigration’s economic contribution was ‘irrelevant and misleading’, added the report. Instead, the yardstick should be income per head of population or GDP per capita.

The Tories last month said the Government’s immigration policy was in ‘chaos’ after new Immigration Minister Phil Woolas suggested there could be a population cap of 70 million, before appearing to row back.

Last week a Commons cross-party group on Balanced Migration said immigration rules should be further tightened during the economic downturn.

Lord Wakeham stressed that Britain ‘as a whole’ had not lost out from immigration and neither had particular groups lost out significantly. The committee also recognised the very ‘valuable contribution’ made by immigrants, he added.

He said the Government had rejected the committee’s report—suggesting it contained ‘combined conclusions that were overspun with analysis’.

Liberal Democrat Lord Vallance of Tummel, former BT chairman, said that when large numbers of immigrants arrived in a limited number of locations, the ‘shoe will begin to pinch’.

Councils, particularly in the popular parts of London and the south east, complained they had not had the right resources to deal with this.

The report recommended that the Government should have an explicit and reasoned indicative target range for net immigration.

‘There is no excuse for confusing our recommendation with a call for a cap on gross immigration—a different kettle of fish altogether and one which is neither necessary or desirable.’

The Government’s response seemed to have confused net with gross and a reasoned target range with an arbitrary cap, he said.

Lord Dholakia, former Liberal Democrat president, said there were potentially huge economic benefits from attracting the best talent to the UK.

Migration had already brought substantial benefits to the country and may become even more important at a time when the population was ageing.

Crossbencher Baroness Valentine, chief executive of the London First business organisation, said the report asked the right questions and she agreed with some of its conclusions.

‘We must have better and more meaningful data if we are to fully understand the implications—both positive and negative—that immigration has for our country.

‘Our challenge is to ensure that the best talent is found in, and keeps coming to, the UK.

‘Allowing British businesses to recruit globally does not open the doors to an unstoppable influx of immigrants if education and training systems equip British workers to compete.

‘I’d like UK workers to win on merit not because we have changed the rules to prevent the best competing at all.’

Labour’s Lord Paul, a committee member, said the reliance on the measurement of GDP per capita was ‘fundamentally flawed’ because it could not take into account the long-term benefits offered by migrants’ families.

Indian-born Lord Paul, who described himself as ‘proud to be an immigrant’, said the UK’s wealth and status owed a lot to its history of welcoming migrants.

He said: ‘In my view the status Britain has enjoyed through history, compared to its size and population, is largely due to the fact that we welcome immigrants from all over the world and have recognised their value and contribution.’

‘To try to isolate the economic aspect, however dictated by the terms of reference of the committee, is bound to be unsatisfactory both for public consumption and for policy making.’

Labour’s Lord Peston was even more strident in his attack on the committee’s report.

He said: ‘I dislike this report intensely. Indeed, I regard this report as the worst report produced in this House in my 21-and-a-half years here.

‘I’d like to make sure that’s on the record.’

Lord Peston added: ‘The committee, if it really believed this subject was a top priority, would have proceeded with the utmost caution.

‘What we have is something quite different, there is no historical perspective at all, the emphasis is entirely on the period of power of the present Government.

‘In addition we have, to my amazement, a report in which the opinions of a xenophobic front group such as Migration Watch is given the same weight as the Institute of Public Policy Research, an outstanding research body.

‘Again the lack of judgment on the part of the committee I find amazing.’

Crossbencher Lord Best, president of the Local Government Association and former chief executive of the Joseph Rowntree Housing Trust, said immigrant labour made a ‘substantial’ contribution to construction and social care.

‘I have been hugely impressed by the energy, cheerfulness, honesty and reliability of the new migrants and of course by their willingness to work at wage levels that are unattractive to the established population, which keeps down the costs of providing services, not least charges in care homes.’

Tory Lord Griffiths of Fforestfach, a committee member and former director at the Bank of England, revealed that Lord Peston had been his first teacher of economics.

He told him: ‘I don’t think I have ever had such a withering attack on any essay I would ever have written as you have given us.’

Lord Griffiths stressed the committee had made every attempt to not be party-political. He added: ‘There is no way in my judgment that it advances a racist or xenophobic agenda.

‘Having said that I have one regret and that is I accept that in some paragraphs we should have been more explicit and fulsome in our praise of the contribution of immigrants to the UK economy.’

Labour’s Lord Dubs, a former minister, said he was disappointed by the report and its tone.

‘Whatever the intentions of its authors, the anti-immigration lobby had a field day when it was published.

‘It maybe that it was misunderstood. But the fact is that they drew some comfort from the conclusions of the report.’

Lord Dubs said he had long believed that immigration had been of benefit to Britain and found it difficult to relate the report’s conclusions to practical experience.

‘If every immigrant left Britain tomorrow this House could not function on Monday because so many of the staff who support the Palace of Westminster are immigrants,’ he added.

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